British ambassador to Luxembourg John Marshall (left) with Herman van Rompuy, former president of the European Council and former prime minister of Belgium
Photo: Matic Zorman
Brexit was at the forefront of the 7th annual cross-border distribution conference hosted by Deloitte and Elvinger Hoss Prussen, in partnership with Financial Times Live, on 12 February.
The closing panel focused on the shifting sands of Europe’s financial hub post-Brexit, posing fundamental questions--not only to what extent major asset firms were looking to relocate to remain in the EU to retain fund passporting benefits, but also what the future looks like for London.
British ambassador to Luxembourg John Marshall was one of the panelists and admitted that while a lot will change, there’s still plenty of mutually benefit aspects that exist as it pertains to financial service.
Nevertheless, “We won’t have access to passporting,” he said. “We want to retain on both sides our regulatory and decision-making autonomy.”
Former finance minister and partner of Elvinger Hoss, Luc Frieden, agreed that one of the main advantages of being in the EU is passporting rights and that “there will remain a close practical relationship between the EU and [this] third country… but there are also other third countries.”
In this way, the UK would theoretically be no different than another friendly third country, such as the US. “EU countries are defending their own interests, just as [the UK] is defending its own interest,” added former European Council president and former prime minister of Belgium, Herman van Rompuy. He added that plenty of cities--Paris, Amsterdam and Dublin, to name a few--were making themselves as attractive as possible for investment, although he still believes “Luxembourg is a big, big winner”.
A frustrating “grace period”
If most panelists could agree on something, it was that there would be a long transitional period and the short-term and long-term outlooks could be quite different.
“I think that a deal is a no-deal,” Frieden said, adding: “How the future will look after 2020 still needs to be negotiated.”
Peter Grimmett (M&G Group) and Carla Jane Findlay-Dons (Brown Brothers Harriman). Photo: Matic Zorman
Carla Jane Findlay-Dons, chief global regulatory and market strategist of Brown Brothers Harriman, added that “the deal isn’t a deal, it’s a grace period”. Over the longer term, she sees London as still offering opportunities around financial services, e.g., in technology and innovation, and cites the city’s diversity and pool of talent.
But even the short-term, there needs to be more visibility. Peter Grimmett, head of regulatory development of the M&G Group, said they have a “substantial presence” in Luxembourg. Following the 2016 referendum, M&G built a Sicav platform in the grand duchy as part of its strategy for international investors.
But, he said, “We know there are MoUs, we know they have been agreed, but they haven’t been signed. Our clients are asking us a lot of questions.”